U.S. briefing

US, Japan and UK face rate decisions as inflation raises pressure

Policymakers in the US, Japan and UK are due to set interest rates in the coming week as inflation raises the prospect of increases.

Rolled banknotes from several currencies arranged together
Rolled banknotes from several currencies arranged side by side.

Central bankers in the US, Japan and UK face interest-rate decisions in the coming week, with rising inflation increasing the prospect that borrowing costs could move higher.

Annual US inflation remained at 3.4% in data published Friday. Inflation has exceeded the Fed’s 2% target for more than five years, and higher energy costs are expected to add further pressure.

Markets and economists expect the Bank of England to keep rates at 3.75% on Thursday. Governor Andrew Bailey has said rising mortgage rates have already provided some of the restraint that a policy-rate increase would deliver.

Financial markets are pricing in four UK rate increases over the next 12 months. Before the latest surge in oil prices, they had expected three increases over that period.

Bank of Japan policymakers are scheduled to announce their decision Friday. They are widely expected to increase interest rates, a move that would support the yen’s recent recovery in foreign-exchange markets.